Nickel Has Biggest Weekly Gain in Four Years on Supply Concerns

May 09, 2014 2:29 pm ET

May 9 (Bloomberg) -- Nickel prices rose, capping the biggest weekly rally in four years, after a plant closure by Vale SA, the world’s second-biggest producer, added to global- supply concerns.

This year, nickel has surged 43 percent, the most among the main industrial metals traded in London. Indonesia, the top supplier from mines, has barred exports of raw ore, while the threat of more sanctions against Russia has spurred speculation that shipments will disrupted.

Operations at Vale’s plant in the South Pacific island nation of New Caledonia were suspended this week after a spill of a solution containing acid. The global market will swing to a deficit by next year, according to TD Securities.

“The market is in a frame of mind where bullish news is taken as extremely bullish,” Stephen Briggs, a metal strategist at BNP Paribas SA in London, said in a telephone interview. “If that spill of acid had happened six months or nine months ago, it would have had no positive price impact at all.”

Nickel for delivery in three months climbed 2.6 percent to settle at $19,905 a metric ton at 5:50 p.m. on the London Metal Exchange. This week, the price jumped 9 percent, the most since February 2010.

Earlier, the price reached $20,500, the highest since Feb. 22, 2012. Yesterday, trading on the LME rose to a record.

Supply will exceed demand by 70,000 tons this year before the market moves to a deficit of about 104,000 tons in 2015, according to TD Securities.

Russia is home to OAO GMK Norilsk Nickel, the biggest producer of refined metal. Vladimir Putin’s government is spurring unrest in east Ukraine after annexing Crimea, the U.S. its European allies say, and more sanctions may be imposed.

Copper for delivery in three months rose 0.2 percent to $6,745 a ton ($3.06 a pound) on the LME. Tin, aluminum, lead and zinc dropped.

On the Comex in New York, copper futures for July delivery gained 0.7 percent to $3.083 a pound. The metal has dropped 9.2 percent this year.